Food for thought: The changing landscape of the food and drink industry

30 May 2015

This Barclays co-produced report identifies some of the changes, challenges and issues faced by UK food and drink manufacturers.

The report is based on detailed interviews with senior representatives from a range of manufacturing and process businesses. The authors also surveyed those working in the food and drink sector, providing the basis for additional statistical analysis.

Our research in this report addresses four interrelated topics:

The structure of the UK food and drink industry

The UK food and drink industry is diverse and participants range from household-name brands and giant multinational corporations through to small family businesses and artisan suppliers. Supporting the producers are equipment and technology companies and project management firms.

Competitiveness and exports

Competitiveness is a difficult subject in the food and drink industry, since the overall market is very rigid. Despite this, it is possible to be flexible within market subsectors.

Technology and investment issues

The food and drink industry faces particular pressures in terms of hygiene and uniformity of product that make it a prime candidate for increasing automation. This is a priority for more than half of the companies surveyed.

Future prospects for growth

Despite ongoing challenges, the food and drink industry is optimistic for its future. Optimism and confidence are likely to be reflected in increased investment, both in manufacturing technology and market development, which may for some companies include exporting.

Key recommendations

Significant changes in the UK food and drink retail sector will impact on the products that manufacturers supply and the visibility of their own brands, bringing both opportunities and causing concern for manufacturers.

Niche products and premium brands offer all food and drink manufacturers opportunities to exploit new markets – a route to greater business agility.

Engineering and technology, in the form of automation and supply chain logistics, have significant potential to change the business equations for food and drink manufacturers.

The impact of technology will be significantly reduced if the industry continues to be dominated by short-term considerations.

The sector is tough and resilient; these are qualities that give the food and drink industry confidence to invest for the future.

The food and drink supply chain model could benefit from further collaboration and partnership, enabling the UK industry to increase competitiveness and opportunities to export.